Post Offices

Part of the debate – in the Scottish Parliament at 11:22 am on 21 December 2006.

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Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat 11:22, 21 December 2006

There is no doubt that there is no agreement between the Labour party and the Liberal Democrats on the decision of the UK Government on this matter. There is agreement that reform is needed, but we are very clear that the way in which the UK Government has set about it is the wrong way. I am disappointed that the Labour amendment is not clearer in stating that and I am disappointed that the SNP motion is not clearer in stating that the Government is taking the wrong way forward. It should be doing that and not calling for representations to be made.

There is a requirement for the types of reforms that Alasdair Morgan highlighted. For example, in my constituency, constituents in Ettrick Bridge should have more central and local government services delivered to them through the post office. If services were combined in that way, the entire Ettrick valley could receive those services locally. In Innerleithen, planning should now be under way on future services so that there is no repeat of what happened in Nora Radcliffe's constituency, where the post office is the last service to remain. Given that the police station in Innerleithen has closed, the time is right to start on a real community plan. The UK Government's decision on its consultation is the wrong way forward; it serves only to work against the community planning approach.

On reform, it is clear that the Royal Mail has outdated sorting equipment: only 50 per cent of mail is sorted electronically, whereas 90 per cent of the mail that its competitors in TNT or Deutsche Post handle is sorted electronically. The Royal Mail estimates that it needs a £2.2 billion investment if it is to modernise. The Postal Services Commission, the regulator, allowed only £1.2 billion, of which £900 million is to come by way of a Government loan. That is woefully inadequate investment, particularly when the Royal Mail is hidebound by regulation. It is interesting to note that the DTI consultation majors on the loss of £4 million a week for the network. That should have been put in the context of the Royal Mail Group's operating profit in 2005-06 of £355 million, on record revenues of £9 billion.

As Parliament has heard, from April 2003, the Government started paying benefits and state pensions directly into customer's bank accounts and established the Post Office card account through Post Office Ltd. One of the problems with the card account is that it has been a success: 3.7 million Department for Work and Pensions customers have continued to use post offices through opening a Post Office card account. In January 2006, the DWP made it known that it would not renew the contract for the card account when it comes to an end in 2010. As Alasdair Morgan pointed out, the Select Committee on Trade and Industry had received no information from the Government that the decision to establish the card was a temporary one. In its report of 30 October, it makes clear its disappointment on the matter. There continues to be a need for clarification on the Government's position, post 2010, on the Post Office card account. It is the second-highest earner—second only to postal work—for rural post offices, so the decision on its future is crucial to continuation of the network. The uncertainty is compounding the reduction in business and footfall that we have heard about.

The Select Committee on Trade and Industry was clear that the rural network is supported not for purely economic reasons. In its report, it states:

"If the Post Office network were just a commercial entity, it would not deserve to be supported by Government. However, it fulfils a wider community need. In many places Post Office branches serve as the heart of the community."

Another paragraph from the report states:

"Some Post Office branches, especially those in rural areas, will always remain unviable. We believe that it is vital that across the whole of Government there is a clear recognition of the role that Post Offices play in delivering Government objectives in the community."

The Government in London is failing to recognise post offices' role. Its consultation paper is seriously flawed and needs to be rejected. Parliament should be clear about stating that, rather than just asking the Executive to make representations to the Government, as the SNP has asked us to do.